Advancing food processing FY2017 Financial Results February 8, - PowerPoint PPT Presentation

Advancing food processing FY2017 Financial Results February 8, 2018 1

ARNI ODDUR THORDARSON LINDA JONSDOTTIR Chief Executive Officer Chief Financial Officer 2

A GREAT CLOSE OF A GREAT YEAR Strong earnings growth with healthy profit margin of around 15% EBIT for eight quarters in a row, the order book is at an all-time high and successful management of production ramp up in 4Q17 4Q17 HIGHLIGHTS REVENUES ADJUSTED EBIT • 4Q17 was a record quarter in terms of +18% +31% revenues and 295 46 EUR EUR 250 247 profitability 38 +19% 35 +21% 295m 46m • Production ramp up was well managed in 4Q17 • All industries delivered 4Q16 3Q17 4Q17 4Q16 3Q17 4Q17 higher revenues compared to 3Q17 ORDERS RECEIVED • Orders received were ORDER BOOK robust • Order book signifiantly 296 472 294 468 282 EUR EUR higher than 4Q16 350 282m 472m 4Q16 3Q17 4Q17 4Q16 3Q17 4Q17 3

ANNUAL REVENUES OF EUR 1 BILLION For the full year, revenues were over EUR 1 billion with 15% EBIT. In light of the good results delivered in 2017 and robust order book, we expect strong organic revenues growth in 2018. 2017 HIGHLIGHTS REVENUES ADJUSTED EBIT • Orders received increased by 13% over +6% +10% the year 1,038 EUR EUR 983 157 143 • Revenues increased by 1,038m 157m 6% • Operational EBIT increased 10% 2016 2017 2016 2017 • Earnings Per Share was up 29% ORDERS RECEIVED ORDER BOOK • Strong operational cash flow and leverage at x1.9 net debt/EBITDA EUR EUR 1,144 472 • Marel starts 2018 with a 1,013 350 1,144m 472m strong order book, at EUR 472m, or x0.45 of trailing twelve month 2016 2017 2016 2017 revenues 4

BALANCED REVENUE MIX Good market conditions and overall balanced product mix. Focus on the three industries to counterbalance fluctuations in operations. Long term outlook is good for all industries. POULTRY MEAT FISH 32% of revenues 13% of revenues 54% of revenues 11.5% EBIT* margin 4.3% EBIT margin 19.5% EBIT margin • Good first half of the year, however • Marel Fish is on track and delivered • Very strong full year with robust order 2H17 was affected by product mix and good order intake and improved intake, strong volume and solid timing of deliveries of large orders, soft margins in core business while operational performance outlook expected to continue in the discontinuing customized onboard • Good market conditions and strong short term solutions in Seattle competitive position • Marel is strengthening its position in • Operational performance below long South America with the acquisition of term targets Brazilian meat processor Sulmaq Marel is reaping the benefits of a steady Focus going forward on Focus on full line offering for flow of innovative products with standard increased standardization wild whitefish, farmed salmon and blocks and full line offering and modularization farmed whitefish All financial numbers relate to the 2017 Annual Consolidated Financial * Operating income adjusted for amortization of acquisition-related 5 Statements. Other segments account for 1% of the revenues. intangible assets

ORDERS RECEIVED Orders received in 2017 were robust amounting to EUR 1,144 million, compared to revenues of EUR 1,038 million • At year-end, the order REVENUES AND ORDERS RECEIVED EUR m book was x0.45 of trailing twelve months revenues 350 • Greenfields and 300 projects with long lead times constitute the 250 vast majority of the 200 order book • Standard equipment 150 and spare parts run 100 with shorter cycles than larger projects 50 • Maintenance, spare 0 parts and services, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 now close to 40% of 2014 2015 2016 2017 revenues Revenues Orders received 6

SOLID OPERATIONAL PERFORMANCE LINDA JONSDOTTIR Chief Financial Officer

FIRM STEPS TAKEN TO IMPROVE PROFITABILITY Strong earnings growth with healthy profit margin of around 15% EBIT margin for eight consecutive quarters • Ramp up of production Adjusted EBIT: Adjusted EBIT: Pro forma EBIT: 14.6% Adjusted EBIT: well managed in 4Q17 Consolidated: 14.4% 6.8% 12.2% 15.2% with higher revenues and 24% 45 operational costs rising at 21% slower pace, leading to 40 higher EBIT 18% 35 EUR millions • Improved flexibility with 30 15% more scalable operations 25 12% following ‘Simpler, 20 Smarter, Faster‘ and 9% strategic investments in 15 innovation and 6% 10 infrastructure 3% 5 • Ongoing and continued 0 0% investment in future Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 platform to serve 2014 2015 2016 (Q1 pro forma) 2017 customers needs better and sustain competitive EBIT EBIT as % of revenue edge Note: Operating income adjusted for amortization of acquisition-related intangible assets (PPA) in 2016-2017. 2014-2015 EBIT adjusted for refocusing cost and acquisition costs. 8

INCOME STATEMENT: Q4 2017 Revenues in Q4 2017 were EUR 294.8m with an adjusted EBIT of EUR 46.2m or 15.7% EBIT margin. Gross profit was EUR 116.9m or 39.6% of revenues. In EUR million unless stated otherwise Q4 2017 Of revenues Q4 2016 Of revenues Change Revenues 294.8 250.0 +18% Cost of sales (177.9) (148.8) +19% Gross profit 116.9 39.6% 101.2 40.5% +15% Selling and marketing expenses (32.2) 10.9% (36.0) 14.4% -11% Research and development expenses (16.7) 5.7% (13.5) 5.4% +24% General and administrative expenses (21.8) 7.3% (16.6) 6.6% +31% Adjusted result from operations 46.2 15.7% 35.1 14.0% +32% Amortization of acquisition-related (in)tangible assets (2.4) (6.7) -64% Result from operations 43.9 14.9% 28.4 11.4% +55% Net finance costs (4.4) (3.9) +13% Result before income tax 39.5 24.5 +61% Income tax (5.7) (1.8) +217% Net result 33.8 11.5% 22.7 9.1% +49% 9

INCOME STATEMENT: FULL YEAR 2017 Revenues in 2017 reached the EUR 1bn mark with an adjusted EBIT of EUR 157m or 15.2% EBIT margin. Gross profit was EUR 407m or 39.2% of revenues. In EUR million unless stated otherwise FY 2017 Of revenues FY 2016 Of revenues Change Revenues 1,038.2 969.7 +7% Cost of sales (631.5) (572.7) +10% Gross profit 406.7 39.2% 397.0 40.9% +2% Selling and marketing expenses (120.5) 11.6% (128.5) 13.2% -6% Research and development expenses (57.8) 5.6% (63.1) 6.5% -8% General and administrative expenses (71.0) 6.8% (66.2) 6.8% +7% Other operating income - - 0.2 0.0% - Adjusted result from operations 157.4 15.2% 139.4 14.4% +13% Amortization of acquisition-related (in)tangible assets (17.1) (24.6) -30% Result from operations 140.3 13.5% 114.8 11.8% +22% Net finance costs (20.3) (25.4) -20% Result before income tax 120.0 89.4 +34% Income tax (23.1) (13.6) +69% Net result 96.9 9.3% 75.8 7.8% +28% 10

ORDER BOOK Market condititions are good and the order book grew EUR 100m in 2017 to an all-time high of EUR 472m, projects were well distributed geographically and between the poultry, meat and fish industries HIGHLIGHTS ORDER BOOK EUR m • Order book of EUR 472m at year-end* • Orders received in 2017 were higher than Order intake revenues in 2017 Revenue 2017 • The strong order book (orders EUR booked off) provides a good 1,144 million foundation going into the EUR 2018 operational year 1,038 million • Order book mix is different per industry, in MPS particular the level of at end of 2015 service revenues EUR 139 million Order book • Largest orders include at end of Order book Greenfield projects with 2017* at end of Costco and Lincoln in 2016 Marel EUR the US (poultry), and at end of 2015 472 million EUR 350 million Leroy in Norway (fish), EUR 181 million large orders in Australia and Russia (meat) * Including acquired order book of Sulmaq of EUR 17m. 11

BALANCE SHEET: ASSETS 2017 Consolidated Financial Statements HIGHLIGHTS ASSETS • Marel is advancing the In EUR million 2017 2016 Change manufacturing and innovation facilities and Property, plant and equipment 144.7 119.0 +22% improving the working Goodwill 643.9 635.2 +1% environment across the Intangible assets (excluding goodwill) 262.7 277.5 -5% company, as reflected in Other non-current assets 9.3 7.9 +18% PP&E Non-current assets 1,060.6 1,039.6 +2% • Goodwill is increasing because of the Inventories 124.4 122.2 +2% acquisition of Sulmaq Production contracts 48.2 37.0 +30% that adds EUR 13m to Trade receivables 128.9 115.3 +12% goodwill Other receivables and prepayments 46.6 32.7 +42% Derivative financial instruments 0.1 • Working capital items Cash and cash equivalents 31.9 45.5 -31% are impacted by increased volume Current assets 380.0 352.8 +8% • Overall working capital TOTAL ASSETS 1,440.6 1,392.4 +3% is decreasing compared to 2016, primarily caused by down payments on projects 12